Correlation Between Britvic PLC and Barfresh Food

Can any of the company-specific risk be diversified away by investing in both Britvic PLC and Barfresh Food at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Britvic PLC and Barfresh Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Britvic PLC ADR and Barfresh Food Group, you can compare the effects of market volatilities on Britvic PLC and Barfresh Food and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Britvic PLC with a short position of Barfresh Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Britvic PLC and Barfresh Food.

Diversification Opportunities for Britvic PLC and Barfresh Food

-0.44

Correlation Coefficient

Britvic PLC  Barfresh Food

Very good diversification

The 3 months correlation between Britvic and Barfresh is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Britvic PLC ADR and Barfresh Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barfresh Food Group and Britvic PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Britvic PLC ADR are associated (or correlated) with Barfresh Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barfresh Food Group has no effect on the direction of Britvic PLC i.e., Britvic PLC and Barfresh Food go up and down completely randomly.

Pair Corralation between Britvic PLC and Barfresh Food

Assuming the 90 days horizon Britvic PLC ADR is expected to under-perform the Barfresh Food. But the pink sheet apears to be less risky and, when comparing its historical volatility, Britvic PLC ADR is 5.68 times less risky than Barfresh Food. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Barfresh Food Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Barfresh Food Group on October 23, 2024 and sell it today you would earn a total of  39.00  from holding Barfresh Food Group or generate 16.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Britvic PLC ADR  vs.  Barfresh Food Group

Britvic PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Britvic PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Britvic PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barfresh Food Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barfresh Food Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Barfresh Food demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Britvic PLC and Barfresh Food

The main advantage of trading using opposite Britvic PLC and Barfresh Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Britvic PLC position performs unexpectedly, Barfresh Food can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Barfresh Food will offset losses from the drop in Barfresh Food's long position.

The idea behind Britvic PLC ADR and Barfresh Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.